Overpayment refund from closed mortgage (insurance, loan, escrow, fees)

[msm_teacher]

I live in a neighborhood built by a national builder in 2008-2009. Most of us used the builder for our mortgages. These were sold, of course, about a year ago.

Today, many of us received a check for between $1,000 and $1,200 along with a letter stating, " A review of your closed loan file indicated an overpayment in connection with the sale of your home."

Any ideas what this is about? I know for a fact our escrow was cleared out, so it isn't that.

Thanks!

[FalconheadWest]

"Sale" of your home, or "purchase" of your new home?

I'll assume purchase. What happens is the lender will collect escrows based on what the tax value "should" be, but your county was probably still assessing it as a "land" value within the house. Because of that, your escrow account had too much money in it after taxes were paid, and they legally can't hold it and must return it to you. Best to just take the money and put it straight to the principle since it's almost like "found money" you didn't know you had.

[msm_teacher]

The mortgage was sold six months after we purchased.

At that time, I triple checked the numbers and documentation. They did refund us the entire escrow amount. They did not hold our mortgage long enough to have to make insurance or tax payments.

One neighbor is swearing up and down that some new law is making the builder refund based on the lower house values in our neighborhood. Has anyone ever heard anything like this? And, it still would not apply to us because homes are selling at and above what we personally paid.

My real concern is that this isn't a fraud.

[dad2jules]

Couple of questions on this:
Who was your original lender?
Who is your current lender?
Who sent you the check?
Who is your builder?

[SmartMoney]

hehehe.......yep, I can almost guarantee what it was. The file was audited and found that some unallowable fees were collected, or, the disclosures required for those fees were not collected. If you Google a bit further, you could possibly get the full story. It would take a bit of digging to find the common denominator, they aren't going to come out and tell you for fear additional owners may find they are eligible for the refund, too. It could have been an FHA audit, Fannie, state, or my money is on federal regulatory auditors.


Good for you and tsk, tsk for the lender. It's been a long known controversy that the builder's hold doesn't allow their buyers the best financing package. and the "freebies" are collected back into other areas, anywhere possible. There is much scrutiny and constant debate as to whether builders comply with RESPA when they require (or strongly incentivatize) you to use their in-house lender.

[msm_teacher]

Originally Posted by SmartMoney

hehehe.......yep, I can almost guarantee what it was. The file was audited and found that some unallowable fees were collected, or, the disclosures required for those fees were not collected. If you Google a bit further, you could possibly get the full story. It would take a bit of digging to find the common denominator, they aren't going to come out and tell you for fear additional owners may find they are eligible for the refund, too. It could have been an FHA audit, Fannie, state, or my money is on federal regulatory auditors.


Good for you and tsk, tsk for the lender. It's been a long known controversy that the builder's hold doesn't allow their buyers the best financing package. and the "freebies" are collected back into other areas, anywhere possible. There is much scrutiny and constant debate as to whether builders comply with RESPA when they require (or strongly incentivatize) you to use their in-house lender.

Thanks! That sounds more feasible than the wild theories floating up and down the block.